Posts from machine learning

The Robot Tax And Basic Income

In my work to prepare for the Future of Labor conversation we had at NewCo Shift a few weeks ago, I talked to a number of experts who are studying job losses due to automation and thinking about what might be done about it. Two ideas that came up a number of times were the “robot tax” and the “basic income.”

The ideas are complementary and one might fund the other.

At its simplest, a “robot tax” is a tax on companies that choose to use automation to replace human jobs. There are obviously many variants of this idea and to my knowledge, no country or other taxing authority has implemented a robot tax yet.

A “basic income” is the idea that everyone receives enough money from the government to pay for their basic needs; housing, food, clothing so that as automation puts people out of work we don’t see millions of people being put out on the street.

What is interesting about these two ideas is that some of the biggest proponents of them are technology entrepreneurs and investors, the very people who are building and funding the automation technologies that have the potential to displace many jobs.

It is certainly true that we don’t know that automation will lead to a jobs crisis. Other technological revolutions like farming and factories produced as many new jobs as they wiped out and incomes increased from these changes. Automation could well do the same.

But smart people are wondering, both privately and publicly, if this time may be different. And so ideas like the robot tax and the basic income are getting traction and are being studied and promoted.

The latest proponent of a robot tax is Bill Gates who said this about it:

You ought to be willing to raise the tax level and even slow down the speed. That’s because the technology and business cases for replacing humans in a wide range of jobs are arriving simultaneously, and it’s important to be able to manage that displacement. You cross the threshold of job replacement of certain activities all sort of at once.

There is a lot of economic surplus that could come from automation. Let’s look at ride sharing. Today I pay something like $15 to go from my home to my office in the morning. Something like $10 of that ride is going to the driver. If the ride is automated, either the price goes to $5, saving me $10 a ride which then is surplus to me, or the profit that Uber is making goes up significantly, which is surplus to them. Some of both is likely to happen. This surplus could be taxed, either at the company level or the individual level, so that the cost of the ride doesn’t go down nearly as much and the driver can continue to compete with the robot or the driver can collect some basic income, funded by the robot tax, while they find a new line of work.

At least that is the idea.

I would not characterize myself as a proponent of a robot tax or a basic income. But I find these ideas interesting and worth studying, debating, discussing, and testing at a small scale to understand their impacts. We should absolutely be doing that.

What Is Going To Happen In 2017

Happy New Year Everyone. Yesterday we focused on the past, today we are going to focus on the future, specifically this year we are now in. Here’s what I expect to happen this year:

  • Trump will hit the ground running, cutting corporate and personal taxes, and eliminating the preferential treatment of carried interest capital gains. The stock market has already factored in these tax cuts so it won’t be as big of a boon for investors as might be expected, but the seven and half year bull market run will be extended as a result of this tax cut stimulus before being halted by rising rates and/or some boneheaded move by President Trump which seems inevitable. We just don’t know the timing of it. The loss of capital gains treatment on carried interest won’t hurt professional investors too much because the lower personal tax rates will take the sting out of it. In addition, corporations will use the lower tax rates as an excuse to bring back massive amounts of capital that have been locked up overseas, producing a cash surplus that will result in an M&A boom. This will lead to an even more fuel to the fire that is causing “old line” corporations to acquire startups.
  • The IPO market, led by Snapchat, will be white hot. Look for entrepreneurs and the VCs that back them to have IPO fever in 2017. I expect we will see more tech IPOs in 2017 than we have since 2000.
  • The ad:tech market will go the way of search, social, and mobile as investors and entrepreneurs concede that Google and Facebook have won and everyone else has lost. It will be nearly impossible to raise money for an online advertising business in 2017. However, there will be new players, like Snapchat, and existing ones, like Twitter, that succeed by offering advertisers a fundamentally different offering than Facebook and Google do.
  • The SAAS sector will continue to consolidate, driven by a trifecta of legacy enterprise software companies (like Oracle), successful SAAS companies (like Workday), and private equity firms all going in search of additional lines of business and recurring subscription revenue streams.
  • AI will be the new mobile. Investors will ask management what their “AI strategy” is before investing and will be wary of companies that don’t have one.
  • Tech investors will start to adopt genomics as an additional “information technology” investment category, blurring the distinction between life science and tech investors that has existed in the VC sector for the past thirty years. This will lead to a funding frenzy and many investments will go badly. But there will be big winners to be had in this sector and it will be an important category for VCs for the foreseeable future.
  • Google, Facebook, and to a lesser extent Apple and Amazon will be seen as monopolists by government and individuals in the US (as they have been for years outside the US). Things like the fake news crisis will make clear to everyone how reliant we have become on these tech powerhouses and there will be a backlash. It will be Microsoft redux and the government will seek remedies which will be futile. But as in the Microsoft situation, technology, particularly decentralized applications built on open data platforms (ie blockchain technology), will come to the rescue and reduce our reliance on these monopolies. This scenario will take years to play out, but the seeds have been sown and we will start to see this scenario play out in 2017.
  • Cyberwarfare will be front and center in our lives in the same way that nuclear warfare was during the cold war. Crypto will be the equivalent of bomb shelters and we will all be learning about private keys, how to use them, and how to manage them. A company will make crypto mainstream via an easy to use interface and it will become the next big thing.

These are my big predictions for 2017. If my prior track record is any indication, I will be wrong about more of this than I am right. The beauty of the VC business is you don’t have to be right that often, as long as you are right about something big. Which leads to going out on a limb and taking risks. And I think that strategy will pay dividends in 2017. Here’s to a new year and new challenges to overcome.

What Did And Did Not Happen In 2016

As has become my practice, I will end the year (today) looking back and start the year (tomorrow) looking forward.

As a starting point for looking back on 2016, we can start with my What Is Going To Happen In 2016 post from Jan 1st 2016.

Easy to build content (apps) on a cheap widespread hardware platform (smartphones) beat out sophisticated and high resolution content on purpose built expensive hardware (content on VR headsets). We re-learned an old lesson: PC v. mainframe and Mac; Internet v. ISO; VHS v. Betamax; and Android v. iPhone.

And Fitbit proved that the main thing people want to do with a computer on their wrist is help them stay fit. And yet Fitbit ended the year with its stock near its all time low. Pebble sold itself in a distressed transaction to Fitbit. And Apple’s Watch has not gone mainstream two versions into its roadmap.

  • I thought one of the big four (Apple, Google, Facebook, Amazon) would falter in 2016. All produced positive stock performance in 2016. None appear to have faltered in a huge way in 2016. But Apple certainly seems wobbly. They can’t make laptops that anyone wants to use anymore. It’s no longer a certainty that everyone is going to get a new iPhone when the new one ships. The iPad is a declining product. The watch is a mainstream flop. And Microsoft is making better computers than Apple (and maybe operating systems too) these days. You can’t make that kind of critique of Google, Amazon, or Facebook, who all had great years in my book.
  • I predicted the FAA regulations would be a boon to the commercial drone industry. They have been.
  • I predicted publishing inside of Facebook was going to go badly for some high profile publishers in 2016. That does not appear to have been the case. But the ugly downside of Facebook as a publishing platform revealed itself in the form of a fake news crisis that may (or may not) have impacted the Presidential election.
  • Instead of spinning out HBO into a direct Netflix competitor, Time Warner sold itself to AT&T. This allows AT&T to join Comcast and Verizon in the “carriers becoming content companies” club. It seems that the executives who run these large carriers believe it is better to use their massive profits in the carrier business to move up the stack into content instead of continuing to invest in their communications infrastructure. It makes me want to invest in communications infrastructure honestly.
  • Bitcoin found no killer app in 2016, but did find itself the darling of the trader/speculator crowd, ending the year on a killer run and almost breaking the $1000 USD/BTC level. Maybe Bitcoin’s killer app is its value and/or store of value. That would make it the digital equivalent of gold and the likely reserve currency of the digital asset space. And I think that is what has happened with Bitcoin. And there is nothing wrong with that.
  • Slack had a good year in 2016, solidifying its position as the leading communications tool for enterprises (other than email of course). It did have some growing pains as there was a fair bit of executive turmoil. But I think Slack is here to stay and I think they can withstand the growing competition coming from Microsoft’s Teams product and others.
  • I was right that Donald Trump would get the Republican nomination and that the tech sector (with the exception of Peter Thiel and a few other liked minded people) would line up against him. It did not matter. He won the Presidency without the support of the tech sector, but by using its tools (Twitter and Facebook primarily) brilliantly.
  • I predicted “markdown mania” would hit the tech sector hard and employees would start getting cold feet on startups as they saw the value of their options going down. None of this really happened in a big way in 2016. There was some of that and employees are certainly more attuned to how they can get hurt in a down round or recap, but the tech sector has also used a lot of techniques, including repricing options, reloading option plans, and moving to RSUs, to mitigate this. The truth is that startups, venture capital, and tech growth companies had a pretty good year in 2016 all things considered.

So that’s the rundown on my 2016 predictions. I would give myself about a 50% hit rate. Which is not great but not horrible and about the same as I did last year.

Some other things that happened in 2016 that are important and worth talking about are:

  • The era of cyberwars are upon us. Maybe we have been fighting them silently for years. But we are not fighting them silently any more. We are fighting them out in the open. I suspect there is a lot that the public still doesn’t know about what is actually going on in this area. We know what Russia has done in the Presidential election and since then. But what has the US been doing to Russia? I would assume the same and maybe more. If your enemy has the keys to your castle, you had better have the keys to their castle. And as good as the Russians are at hacking into systems, the US has some great hackers too. I am very sure about that.  And so do the Chinese, the Israelis, the Indians, the British, the Germans, the French, the Japanese, etc, etc.  This feels a bit like the Nuclear era redux. Mutually assured destruction is a deterrent as long as both sides have the same tools.
  • The tech sector is no longer the belle of the ball. It has, on one hand become extremely powerful with monopolies, duopolies, or nearly so in search, social media, ecommerce, online advertising, and mobile operating systems. And it has, on the other hand, proven that it is susceptible to the very kinds of bad behavior that every other large industry is capable of. And we now have an incoming President who doesn’t share the love of the tech sector that our outgoing President showed. It brings to mind that scene in 48 Hours where Eddie Murphy throws the shot glass through the mirror and explains to the rednecks that there is a new sheriff in town. But this time, the tech sector are the rednecks.
  • Google and Facebook now control ~75% of the online advertising market and almost all of its growth in 2016:

  • Artificial Intelligence has inserted itself into our every day lives. Whether its a home speaker system that we can talk to, or a social network that already knows what we are about to go out and purchase, or a car that can park itself and change lanes on the highway automatically, we are seeing AI take over tasks that we used to have to do ourselves. We are in the age of AI. It is not something that is coming. It is here. It may have arrived in 2014, or 2015, but if you ask me, I would put 2016 as the year it had its debut in mainstream life. It is exciting and it is scary. It begs all sorts of questions about where we are all going in the next thirty to fifty years. If you are in your twenties, AI will define your lifetime.

So that’s my rundown on 2016. I wish everyone a happy and healthy new year and we will talk about the future, not the past, tomorrow.

If you are in need of a New Year’s Resolution, I suggest moving to super secure passwords and some sort of tool to manage them for you, using two factor authentication whenever and wherever possible, encrypt as much of your online activities as you reasonably can, and not saying or doing anything online that you would not do in public, because that is where you are doing it.

Happy New Year!

Data Wins

Whenever people ask me which company I think will win the self driving car race, I say Tesla.

And the reason is that they have more data.

And when it comes to training machines to do what humans do, more data is better than more software engineers.

Bloomberg has a good post on that today.

Headlines

One of the issues in all of the concerns about “fake news” is the way headlines are used on the Internet. Newspapers and magazines certainly took the construction of headlines into account to drive readers into the stories. But on the Internet, headlines have become that and more. They are the links themselves that fly around the Internet and “convert” someone into coming to your site and reading a story. They are “clickbait.” If we want to address the veracity and authenticity of content on the Internet, we might want to start with headlines.

I’ve had my issues with headlines for years. Many years ago, I allowed a number of publications to repost content I write here at AVC on their online publications. The publication that does that most frequently with my content is Business Insider. You can see the hundreds of posts that BI has republished on my author page at Business Insider. When they started doing this maybe seven or eight years ago, I would notice that they would leave my post intact, verbatim, but rewrite the headline. It would drive me crazy because I view the headline as an integral part of my post. I think about the words I use to title my posts. So I would send them angry emails and most of the time they would change it back. But it was a lesson in the difference between a headline that I liked and a headline that would drive clicks.

I also have seen hundreds of stories written about me, USV, and our portfolio companies that have sensational and often inaccurate headlines followed by stories that are essentially correct and well reported. It drives me nuts but I don’t often do much about it.

It makes me think that someone, or some company, or some open source community ought to build software that parses headlines and the stories that follow and rate them for how well the headline represents the article. That “headline veracity ranking” could then be offered to anyone who presents headlines to readers. That would be social media like Facebook, Twitter, Reddit, etc. That would be email applications and browsers. That would be search engines. Etc, etc, etc.

It would be nice to see some competition in this sector so that one company doesn’t become the arbiter of what is an accurate headline and what is not. That doesn’t sound like a good outcome. But if this is done via open source, or is community powered in some way, this could be a very helpful tool in getting publishers to behave and represent their stories accurately.

And that would be a wonderful thing for the Internet.

AI: Why Now?

UK-based VC David Kelnar wrote an excellent primer on Artificial Intelligence that is a relatively quick read and helps explain the technology and its advancement over the past sixty years since the term was coined in the mid 1950s.

I like this chart which explains the relationship between AI, machine learning, and deep learning.

But my favorite part of David’s post is his explanation of why AI has taken off in the past five years, as this chart shows:

Like most non-linear curves, it is not one thing, but a number of things happening simultaneously, that is causing this explosion of interest. David cites four things:

  1. Better algorithms. Research is constantly coming up with better ways to train models and machines.
  2. Better GPUs. The same chips that make graphics come alive on your screen are used to train models, and these chips are improving rapidly.
  3. More data. The Internet and humanity’s use of it has produced a massive data set to train machines with.
  4. Cloud services. Companies, such as our portfolio company Clarifai, are now offering cloud based services to developers which allow them to access artificial intelligence “as a service” instead of having to “roll your own”.

I feel like we are well into the “AI wave” of technology right now (following in order web, social, and mobile) and this is a wave that seemingly benefits the largest tech companies like Google, Facebook, Amazon, Microsoft, IBM, Uber, Tesla which have large datasets and large userbases to deploy this technology with.

But startups can and will play a role in this wave, in niches where the big companies won’t play, in the enterprise, and in building tech that will help deliver AI as a service. David included this chart that shows the massive increase in startup funding for AI in the last four years:

I would like to thank David for writing such a clear and easy to understand primer on AI. I found it helpful and I am sure many of you will too.

Machine Learning As A Service

Our portfolio company Clarifai introduced two powerful new features on their machine learning API yesterday:

  • visual search
  • train your own model

Visual search is super cool:

image-search

But I am even more excited about the train your own model feature.

Clarifai says it well on their blog post announcing these two new features:

We believe that the same AI technology that gives big tech companies a competitive edge should be available to developers or businesses of any size or budget. That’s why we built our new Custom Training and Visual Search products – to make it easy, quick, and inexpensive for developers and businesses to innovate with AI, go to market faster, and build better user experiences.

Machine learning requires large data sets and skilled engineers to build the technology that can derive “intelligence” from data. Small companies struggle with both. And so without machine learning as a service from companies like Clarifai, the largest tech companies will have a structural advantage over small developers. Using an API like Clarifai allows you to get the benefits of scale collectively without having to have that scale individually.

Being able to customize these machine learning APIs is really the big opening. Clarifai says this about that:

Custom Training allows you to build a Custom Model where you can “teach” AI to understand any concept, whether it’s a logo, product, aesthetic, or Pokemon. Visual Search lets you use these new Custom Models, in conjunction with our existing pre-built models (general, color, food, wedding, travel, NSFW), to browse or search through all your media assets using keyword tags and/or visual similarity.

If you are building or have built a web or mobile service with a lot of image assets and want to get more intelligence out of them, give Clarifai’s API a try. I think you will find it a big help in adding intelligence to your service.

The AI Nexus Lab

In Matt Turck‘s recent blog post about the state of NYC’s tech sector, he wrote:

The New York data and AI community, in particular, keeps getting stronger.  Facebook’s AI department is anchored in New York by Yann LeCun, one of the fathers of deep learning.  IBM Watson’s global headquarter is in NYC. When Slack decided to ramp up its effort in data, it hired NYC-based Noah Weiss, former VP of Product at Foursquare, to head its Search Learning and Intelligence Group.   NYU has a strong Center for Data Science (also started by LeCun).  Ron Brachman, the new director of the Technion-Cornell Insititute, is an internationally recognized authority on artificial intelligence.  Columbia has a Data Science Institute. NYC has many data startups, prominent data scientists and great communities (such as our very own Data Driven NYC!).

And now NYC has our very own AI accelerator program based at NYU’s Tandon Engineering School Accelerator, called The AI Nexus Lab.

The 4 month program will immerse early stage AI companies from around the world with NYU AI resources, computing resources at the Data Future Lab, two full time technical staff members, and a student fellow for each company. Unlike a traditional accelerator, they are recruiting only 5 companies with the goal of market entry and sustainability for all 5. They won’t have a Demo Day, the program will end with a day long AI conference celebrating AI entrepreneurs, researchers, innovators and funders during which which they will announce the 5 companies. Companies will get a net $75,000 for joining the program.

If you have an early stage AI company and want to join this program, you can apply here.

Fun Friday: Self Driving Cars

I saw this projection from BI Intelligence below. It suggests we will have 10mm self driving cars on the road by 2020. They define “self driving” as “as any car with features that allow it to accelerate, brake, and steer a car’s course with limited or no driver interaction”. The Telsa that my wife and I drive fits that definition.

sdc installed base

It is unclear to me whether this is a global number or not. I assume it is. There are over 1bn cars on the road around the world, so that would be 1% penetration. That seems low to me.

Do you think “self driving” will have penetrated more than 1% of the world’s car population by the end of this decade? I do.

Feature Friday: Photo Search

I’ve been uploading my smartphone photos to Google Photo for my last two phones. Earlier this week, I was in a meeting with some architects and I said that I really liked the way they do the showers at the Soho House in Berlin. They asked if I had a photo of them. I opened up Google Photos, typed “Soho House Berlin”, and got this result.

soho house berlin

Sure enough, I had taken some photos of the shower. I showed them to the architects and we were able to talk about the features I liked in the shower. That was kind of magical because other than taking the photos, I had done nothing to tag or categorize them.

This works for all sorts of searches. I remember seeing a painting I really liked at The Hammer Museum in LA. A search on “Hammer Museum” produces the image I was looking for.

hammer museum

If you are looking for photos you took on a trip, you can do the same thing. Here are some photos I took of Grand Bazaar in Instanbul:

grand bazaar istanbul

Google Photos isn’t perfect. Some searches that I would expect to work don’t. But it is pretty good.

Our portfolio company Clarifai has a similar service in an iOS app called Forevery. If you don’t want to upload your photos to Google Photo and want to search them locally on your iPhone, Forevery is a great way to get a similar experience. Forevery will also search your photos in Dropbox.

Since I’m on an Android right now, I am using Google Photos but I use both apps on my iPhone.

Photo search is amazing. You no longer need to create albums and tag and categorize your photos to be able to find them. You just search for them. Kind of like how email changed when Gmail arrived.